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The LeadThe City watchdog has closed an investigation into the power generator Drax, after an almost 10-month review into the sourcing of wood pellets for its biomass power station. The Financial Conduct Authority said it had "reviewed thousands of pages" but that it "did not find evidence that justified any further action".The Regulatory Investigation DetailsThe regulator launched the investigation last year amid concerns that Drax, which operates its eponymous power plant in Selby, North Yorkshire, made misleading statements to the market about the origins of its biomass fuel. The FCA said on Thursday: "Our focus was on areas within our remit, specifically whether Drax's annual reports and accounts between 2021 and 2023 contained misleading statements or left out important information investors needed to know."The Financial Impact AnalysisDrax, which operates the biggest biomass power station in the UK, imports millions of tonnes of wood pellets from across the Atlantic every year and burns them to generate electricity. It has received billions of pounds in government subsidies to help hit national carbon-cutting goals. In 2025 alone, it received £999m for generating about 4.5% of Great Britain's electricity from its plant, according to the climate thinktank Ember. Shares in Drax, which are listed in London, rose by 1.2% in early trading on Thursday. The stock fell sharply when the FCA investigation opened last August.The Industry Impact AnalysisDrax argues that its biomass provides reliable renewable electricity and can help the UK's transition away from fossil fuel. However, there have been persistent claims from campaigners and scientists that the wood pellets burned at its power plant are not sourced sustainably and may be increasing carbon emissions. In 2024, Drax agreed to pay £25m after the energy watchdog Ofgem found it had failed to put "adequate data governance and controls in place" when reporting details of the type of wood historically sourced from Canada.The Future OutlookThe Drax chief executive, Will Gardiner, said in a statement that the company recognised the importance of compliance with its regulatory obligations and that it had "worked constructively with the FCA throughout this investigation." "We are pleased to see the investigation closed with no action being taken," he added. The FCA emphasized that "accurate reporting is crucial to the integrity of our markets, and vital so investors can make informed decisions," suggesting continued scrutiny of environmental claims in the energy sector.